Real deal

New owners of the former State Farm building in Evans said Wednesday they will spend $5 million improving the building, then offer office space for the lowest lease rates in the nation.

A fire-sale purchase price – less than a quarter of that originally set when the building went on the market two years ago – will allow Colorado & Santa Fe Real Estate Co. of Denver to market the space for $2.95 per square foot.

“That’s not a misprint,” said Marcel Arsenault, chief executive officer of the Denver real estate investment firm. “We did a national search, and we think this is the lowest office lease rate in the U.S.”

The University of Northern Colorado Foundation had owned the building since State Farm Insurance Cos. donated it to the university two years ago. Faced with burdensome costs of owning the building, the foundation slashed its asking price by more than half before accepting Arsenault’s $2.85 million bid.

“Without any new tenants, the foundation was about to be eaten alive by carrying costs and operating expenses,” Arsenault said.

Renamed the Tri-Pointe Business Center, the 230,000-square-foot building will be carved up into office spaces of varying sizes under what Arsenault called a “breakup plan.” The rock-bottom $2.95 lease rate will apply only to large-space users, he said.

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The offer will be pitched nationally, with lease ads running in the Wall Street Journal and other publications, Arsenault said.

Greeley’s business boosters said the new owners are just what Evans and Greeley need.

“With the economy turning around the way it has, and things picking up as they have been all over, it should be a very attractive space,” said Ron Klaphake, president of the Greeley Weld Economic Development Action Partnership.

The new owners “have a track record, and they know what they’re doing,” he said. “We’re going to be very happy working with them.”

The purchase of the old State Farm building is the first step in a yearlong, $100 million Colorado & Santa Fee shopping trip up and down the Front Range. Arsenault said he and his staff were prepared to spend that much for vacant buildings in the region, with an eye toward finding new tenants as business conditions improve.

Arsenault also put the strategy to work in the late 1980s, when the real estate was hitting bottom. Those purchases have built Arsenault’s personal real estate portfolio worth $200 million.

Three weeks ago, it appeared the vacant Hewlett-Packard Co. building in west Greeley was high on Arsenault’s list. But he said Wednesday he had pulled away from that deal – at least for the moment.

“When the guy’s throwing you the pitch, and it ain’t right, you don’t swing,” he said of the HP prospect. “Maybe in January or February we can put our heads together with HP and get it done. We may end up with it. You never know.”

The rising economy should make filling the State Farm space easier, said Julia Crawmer, a longtime Northern Colorado commercial real estate broker who Arsenault hired to handle leasing at Tri-Pointe.

“The building really lends itself well to multiple tenants,” Crawmer said. “We will be offering the most competitive opportunities in the northern Colorado market.”

Office lease rates in some parts of the regional market top $20 per square foot, and the Weld County average for the past year has hovered near $12 – three times the rates Colorado & Santa Fe will offer.

But even competitors in the business of leasing commercial real estate said they can see benefits in Colorado & Santa Fe’s plan for the State Farm building.

“Hopefully, this will bring new employers to Greeley, and we’ll all see some spin-off from that,” said Mark Bradley, a broker with Realtec Commercial Real Estate Services in Greeley. “The fact that he’ll be able to attract those kinds of tenants will be good for all of us.”